Cutting through the noise—portfolio positioning in a shifting economy

Whether we’re considering domestic or international equities, market movements and valuations seem to be reflecting sentiments rather than underlying fundamentals. Moving into the second half of 2025, it’s crucial to look beyond inflated valuations and seek pockets of opportunity that offer both value and quality.
In this episode, Matt and Emily talk to podcast host John P. Bryson about how investors can navigate today’s volatile market even as economic slowdown worries persist. Here’s a sneak peek into the conversation.
1 What’s U.S. economic data indicating?
Matt: The employment picture is still holding up okay, with monthly job gains of about 150,000. Initial jobless claims have come up a little bit but are still at a low level historically. Overall, it’s not amazing growth, but it's not too slow either. It seems like no one's appreciating the slowdown in inflation, but the data’s showing it. In our view, some of the current market movements may have rotation or opportunities presenting themselves because the U.S. economy's holding up all right.
2 How is the bond market reacting to U.S. economic data?
Emily: Bonds aren't getting the memo as it relates to the macro backdrop. Normally, you would think that bond yields would be falling meaningfully as inflation comes down. We're not really seeing that. We're sort of chopping around in the 4.50%-ish range.
Housing, for example, is a critical component of the Consumer Price Index (CPI). There is a lot more housing supply coming online, and that is bringing inflation to the lowest level since 2021.1 That's a really notable dynamic that is just not being picked up by the bond market right now.
3 What should investors focus on for the second half of 2025?
Emily: We want to be careful about chasing risk here. We need to think about where we can find value. Where can we find the best earnings growth on a relative basis? Where can we find parts of the market that are on sale? We want to be careful about not getting pushed into momentum-driven areas of markets that are just rallying on sentiment.

1 U.S. Bureau of Labor Statistics.